Changes

==Background==

==Background==

===History of Vertical Separation===

===History of Vertical Separation===

The [[NSF|National Science Foundation]] signed a Cooperative Agreement with [[Network Solutions]] (NSI) as Registry Operator and Registrar for the .com, .net and .org TLDs form 1993-1999. The registry agreement was renewed by ICANN in November, 1999. Under the new agreement, NSI agreed to create a multiple registrar system also known as the [[SRS|SRS]]Shared Registration System]] (SRS), which allows independent registrars to access the system. Independent registrars were to pay NSI $6.00 for every registered or renewed domain names.<ref>[http://archive.icann.org/en/topics/new-gtlds/crai-report-24oct08-en.pdf Revisiting Vertical Separation of Registries and Registrars]</ref>

The [[NSF|National Science Foundation]] signed a Cooperative Agreement with [[Network Solutions]] (NSI) to be Registry Operator and Registrar for the .com, .net and .org TLDs from 1993 to 1999. The registry agreement was renewed by ICANN in November 1999. Under the new agreement, NSI agreed to create a multiple registrar system, also known as the [[SRS|SRS]]Shared Registration System]] (SRS), which allows independent registrars to access the system. Independent registrars were to pay NSI $6.00 for every registered or renewed domain name.<ref>[http://archive.icann.org/en/topics/new-gtlds/crai-report-24oct08-en.pdf Revisiting Vertical Separation of Registries and Registrars], ICANN.org. Published 24 October 2008.</ref>

In addition, ICANN encouraged registry and registrar business separation to promote competition by stipulating in the agreement that NSI will only be allowed to renew its registry agreement with ICANN for 4 years if it sells its registrar business.<ref>[http://archive.icann.org/en/nsi/nsi-registry-agreement-04nov99.htm ICANN-NSI Registry Agreement]</ref> In 2000, [[Verisign]] purchased NSI and re-negotiated its registry agreement for the .com, .net and .org TLDs with ICANN. ICANN did not require ownership separation but implemented structural separation. ICANN explained, ''"there is little if any additional competitive value under today's market circumstances in forbidding the registry operator from also being a registrar, so long as it is done is such a way so as not to discriminate against other competitive registrars."''<ref>[http://www.icann.org/en/news/announcements/icann-pr-01mar01-en.htm Proposed Revision to ICANN-VeriSign Agreements]</ref> <ref>[http://www.icann.org/en/about/agreements/registries/verisign Revised VeriSign Registry Agreements April 16, 2001]</ref>

In addition, ICANN encouraged competition through registry and registrar business separation, by stipulating in the agreement that NSI will only be allowed to renew its registry agreement with ICANN for four years if it sells its registrar business.<ref>[http://archive.icann.org/en/nsi/nsi-registry-agreement-04nov99.htm ICANN-NSI Registry Agreement], ICANN.org. Published 4 November 1999.</ref> In 2000, [[Verisign]] purchased NSI and re-negotiated its registry agreement for the .com, .net and .org TLDs with ICANN. ICANN did not require ownership separation but implemented structural separation. ICANN explained, ''"there is little if any additional competitive value under today's market circumstances in forbidding the registry operator from also being a registrar, so long as it is done is such a way so as not to discriminate against other competitive registrars."''<ref>[http://www.icann.org/en/news/announcements/icann-pr-01mar01-en.htm Proposed Revision to ICANN-VeriSign Agreements], ICANN.org. Published 1 March 2001.</ref><ref>[http://www.icann.org/en/about/agreements/registries/verisign Revised VeriSign Registry Agreements], ICANN.org. Published 16 April 2011.</ref>

In 2000, ICANN introduced new generic top level domain names, which included [[.biz]], [[.info]], [[.name]] and [[.pro]]. On February 26, 2001, ICANN proposed a new registry agreement stipulating the legal separation between registry and registrar under section 3.5 Fair Treatment of ICANN-Accredited Registrars, wherein Registry Operators are not allowed to act as registrars with respect to the Registry TLD. <ref>[http://www.icann.org/en/about/agreements/registries/unsponsored/registry-agmt-26feb01-en.htm Proposed Unsponsored TLD Agreement, 26 February ]</ref>

In 2000, ICANN introduced [[new gTLD|new generic top level domain names]], which included [[.biz]], [[.info]], [[.name]] and [[.pro]]. On February 26, 2001, ICANN proposed a new registry agreement stipulating the legal separation between registry and registrar under section 3.5 Fair Treatment of ICANN-Accredited Registrars, wherein Registry Operators are not allowed to act as registrars with respect to the Registry TLD.<ref>[http://www.icann.org/en/about/agreements/registries/unsponsored/registry-agmt-26feb01-en.htm Proposed Unsponsored TLD Agreement], ICANN.org. Published 26 February 2001.</ref>

In 2005, ICANN implemented the registry-registrar separation of ownership in the registry agreement for the [[.jobs]] and [[.travel]]  sponsored TLDs. Under Section 7.1 clause b and c in the registry agreement states the following provisions:<ref>[http://www.icann.org/en/about/agreements/registries/jobs/jobs-agreement.htm SPONSORED TLD REGISTRY AGREEMENT-.Jobs Registry Agreement]</ref>

In 2005, ICANN implemented the registry-registrar separation of ownership in the registry agreement for the [[.jobs]] and [[.travel]]  sponsored TLDs. Under Section 7.1, clause b and c in the registry agreement states the following provisions:<ref>[http://www.icann.org/en/about/agreements/registries/jobs/jobs-agreement.htm .Jobs Registry Agreement], ICANN.org. Published 5 May 2005.</ref>

(b) Registry Operator Shall Not Act as Own Registrar. Registry Operator shall not act as a  

(b) ''Registry Operator Shall Not Act as Own Registrar.'' Registry Operator shall not act as a registrar with respect to the TLD. This shall not preclude Registry Operator from registering names within the TLD to itself through a request made to an ICANN-accredited registrar.   

registrar with respect to the TLD. This shall not preclude Registry Operator from registering  

(c) ''Restrictions on Acquisition of Ownership or Controlling Interest in Registrar.'' Registry Operator shall not acquire, directly or indirectly, control of, or a greater than fifteen percent ownership interest in, any ICANN-accredited registrar.

names within the TLD to itself through a request made to an ICANN-accredited registrar.   

(c) Restrictions on Acquisition of Ownership or Controlling Interest in Registrar. Registry  

Operator shall not acquire, directly or indirectly, control of, or a greater than fifteen percent  

ownership interest in, any ICANN-accredited registrar.

At present, these provisions are included in the registry agreements for all sponsored and unsponsored TLDs.

At present, these provisions are included in the registry agreements for all sponsored and unsponsored TLDs.

===Separation to Integration===

===Separation to Integration===

Some believe that vertical separation is one of the most important methods used by ICANN to maintain its commitment to promote competition, which is one of the founding principles of the organization. On March 12, 2002, the [[ICANN Board]] passed a resolution stating the organization's strong position for the implementation of "strict separation" of registries and registrars for new gTLDs. The ICANN Board also stated that co-ownership will be prohibited. However, the ICANN Board also indicated, ''"if a policy becomes available from the GNSO, and approved by the Board prior to the launch of the new gTLD program, that policy will be considered by the Board for adoption as part of the New gTLD Program."''<ref>[http://www.icann.org/en/groups/board/documents/resolutions-12mar10-en.htm#5 Adopted Board Resolutions|Nairobi, March 12, 2010]</ref>

Some believe that vertical separation is one of the most important methods used by ICANN to maintain its commitment to promote competition, which is one of the founding principles of the organization. On March 12, 2002, the [[ICANN Board]] passed a resolution stating the organization's strong position for the implementation of "strict separation" of registries and registrars for new gTLDs. The ICANN Board also stated that co-ownership will be prohibited. However, the ICANN Board also indicated, ''"if a policy becomes available from the [[GNSO]], and approved by the Board prior to the launch of the new gTLD program, that policy will be considered by the Board for adoption as part of the New gTLD Program."''<ref>[http://www.icann.org/en/groups/board/documents/resolutions-12mar10-en.htm#5 Adopted Board Resolutions|Nairobi], ICANN.org. Published 12 March 2010.</ref>

Many of the initial steps that ICAN took to introduce competition in the marketplace, including vertical separation, were directed at working to expand the number of registry and registrar companies beyond the single entity, [[Network Solutions]], that managed most major [[TLD]]s before the introduction of [[ICANN]]. After contract negotiations allowed that market control to be broken up the case for reversal of the vertical separation became stronger. In 2008, ICANN commissioned an independent assessment of the separation/integration issue; the findings suggested that ICANN move "slowly, but deliberately and in consultation with the industry, towards permitting integration of registry and registrar services under many, but not all, circumstances."  This resulted in two years of Working Groups, workshops [[PDP]]s, where the [[ICANN Board]] deferred the issue to the [[GNSO]]. In that time, the [[GNSO]] was unable to come to a consensus, and as a result the Board considered many other reports, recommendations, and input, and came to its own decision. "In adopting its resolution, the Board concluded that - so long as certain restrictions were put into place on the conduct of registries and registrars, specifically as they relate to data, and so long as competition review remained available in the event of concerns regarding market power - there was no economic or competition rationale to prohibit, on an across-the-board basis, registries from holding ownership interests in registrars, and vice versa."<ref>[http://news.dot-nxt.com/2010/10/25/icann-ec-letter-vertical-integration ICANN EC Letter Vertical Integration, News.Dot-Nxt.com]</ref>

Many of the initial steps that ICANN took to introduce competition in the marketplace, including vertical separation, were directed at working to expand the number of registry and registrar companies beyond the single entity, [[Network Solutions]], that managed most major [[TLD]]s before the introduction of [[ICANN]]. After contract negotiations allowed that market control to be broken up, the case for reversal of the vertical separation became stronger. In 2008, ICANN commissioned an independent assessment of the separation/integration issue; the findings suggested that ICANN move "slowly, but deliberately and in consultation with the industry, towards permitting integration of registry and registrar services under many, but not all, circumstances."  This resulted in two years of [[Working Groups]], workshops [[PDP]]s, where the [[ICANN Board]] deferred the issue to the [[GNSO]]. In that time, the [[GNSO]] was unable to come to a consensus, and as a result, the Board considered many other reports, recommendations, and inputs, and came to its own decision. According to .nxt, "In adopting its resolution, the Board concluded that - so long as certain restrictions were put into place on the conduct of registries and registrars, specifically as they relate to data, and so long as competition review remained available in the event of concerns regarding market power - there was no economic or competition rationale to prohibit, on an across-the-board basis, registries from holding ownership interests in registrars, and vice versa."<ref>[http://news.dot-nxt.com/2010/10/25/icann-ec-letter-vertical-integration ICANN EC Letter Vertical Integration], Dot-Nxt.com. Published 25 October 2010.</ref>

During a Special Meeting on Novemer 5, 2010, the ICANN Board changed its position regarding the vertical separation of registries and registrars. The Board removed the restriction on cross ownership on the Registry Agreements and replaced it with ''"requirements and restrictions on any inappropriate or abusive conduct arising out of registry-registrar cross ownership..."'' These abusive conducts are not limited to misuse of data and violations of a registry code of conduct. In addition, ICANN also stated that it will include additional enforcement mechanisms such as self-auditing requirements, contractual termination and punitive damages. Moreover, it also emphasized that "it will have the ability to refer issues to relevant competition authorities."<ref>[http://www.icann.org/en/groups/board/documents/resolutions-05nov10-en.htm Special Meeting of the ICANN Board of Directors, ICANN's Silicon Valley Office, Palo Alto, California, USA]</ref>

During a Special Meeting on Novemer 5, 2010, the ICANN Board changed its position regarding the vertical separation of registries and registrars. The Board removed the restriction on cross ownership in the Registry Agreements and replaced it with ''"requirements and restrictions on any inappropriate or abusive conduct arising out of registry-registrar cross ownership..."'' These abusive conducts are not limited to misuse of data and violations of a registry code of conduct. In addition, ICANN also stated that it will include additional enforcement mechanisms such as self-auditing requirements, contractual termination and punitive damages. Moreover, it also emphasized that "it will have the ability to refer issues to relevant competition authorities."<ref>[http://www.icann.org/en/groups/board/documents/resolutions-05nov10-en.htm Special Meeting of the ICANN Board of Directors, ICANN's Silicon Valley Office, Palo Alto, California, USA], ICANN.org. Published 5 November 2010.</ref>

====10 Justifications for Integration====

====10 Justifications for Integration====